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WHEN YOUR MARRIAGE BREAKS UP, YOU MAY WANT TO CHANGE WHO RECEIVES YOUR ASSETS IN THE EVENT OF YOUR UNTIMELY DEATH.

There are various issues to consider:
a. Your Will
Usually couples make each other the beneficiary of their Wills. When you get divorced, any provisions in the Will where the former spouse is left assets or made the Executor are revoked. Therefore, you will need to reassess the provisions in your Will. Consequently, if you are drafting a new Will after a marriage breakdown, you should make sure that any dependent children are properly provided for on your death. The Family Law court can step in and overrule your Will if you don’t. Take the opportunity to review 2bempowered Will planning checklist on important issues to consider when creating a Will, and complete this 2bempowered personal record keeper to help you gather and update important information that you can share with loved ones including your executor or executrix.

b. RRSPs and RRIFs and Life Annuities
With these investment structures you can (and should in most circumstances) have named beneficiaries. When your relationship breaks down you will need to look at these to determine if the beneficiaries are still appropriate in your new situation.

Insurance
In many cases, married couples name each other as the beneficiaries of their life insurance policies. If you are becoming separated or divorced, you may want to reconsider who you name as your beneficiary. If you do not contact the insurance company, your former spouse will continue to be the beneficiary of the policy. In the case of relationship breakdown, you may want to change the insurance coverage on your life in order to provide for your children should anything happen to you.
Depending on the nature of the separation agreement, you may be required to buy life insurance with your former spouse and/or children named as the beneficiaries. This is typically the case where spousal and/or child support is being paid by the primary income earner. This ensures that if the supporting spouse dies, there would be enough money to support the children. In the case of this type of policy, the beneficiaries are ‘Irrevocable’. That means the beneficiary cannot be changed to someone else without the written permission of the current beneficiary.

Jay F. Llave
“Create and Protect Wealth”
Insurance and Financial Advisor
Creative Planning Financial Group
(416) 487-5210 ext. 5317
http://www.jayllave.com About me
http://www.jayllave.com Our BLOG

2bempowered’s Personal Records Keeping:
Make sure that your spouse/siginificant other/children/executor know where the following Documents and Information Is:
* your will
* the family passports – for each person
* Birth Certificates OR Landed Immigrant Status Papers OR Citizenship (if new)
* Health Card for all family members
* CPP information
* RRSPs – what are you invested in?
* Name and number of Children’s doctor: family, eye, dentist, specialists
* What bank(s) do you and your significant other deal with – all accounts
* Name of your financial advisor(s) – what does he/she financially control? There may be different people that you deal with.
* Investments – mutual funds? Insurance? Reits? Where is the money invested?
* Name of accountant(s) and lawyer(s)
* Who is your mortgage registered with – what is the status: renewal date, how much owing on it, etc. Whose name is on the mortgage? Is there a lien on the house?
* Car leasing information
* Property taxes – are you paid up to date?
* Personal taxes – is your spouse paid up to date?
* Personal Bankruptcy- will this affect the estate?

2bempowered’s Will Planning Checklist:
* in the case of joint custody, if you die before your ex-husband/wife the children will go to the custody of the living parent. In a case where both parties are gone you must think about who you want to leave your child/children to – who will be the most responsible, parent in the way that you want, and loving to your child/children.
* in the case of sole custody then naming a person to care for your child/children is imperative. Again, think about the most responsible, a person/couple who parents in the same way you do, and one who loves your child.
* Make sure that you have enough life insurance for your children so that they can live in a lifestyle that they are used to. Term insurance is inexpensive. Name your child/children the beneficiaries
* In a will you have a financial executor – choose wisely, one that will work in the best interests of the child/children, you can trust with the money that is left, and will honour your wishes. I have spread out the distribution with 25% at age 21, 25% at age 30 and the remainder at age 35. I am concerned that if my children are left with too much money at a young age they will blow it. The executor will have discretion to distribute for what is necessary – education and so on.
* In a will you also have a medical executor – make your wishes known to this person – Do not want to have heroic measures done? Do not want to live in a vegetative state? Make sure that your beliefs are known to this person so that they will carry them out.
* In the case of property – make sure that all your taxes are covered so when the property is transferred to the child/children (young or old) that they do not have to worry about this. In many cases, property – second homes, cottages, condos, apartment buildings, etc. are passed on and there is a capital gains tax that if not financially considered can make the property too expensive for the child and will need to be sold. (This is in Canada – other countries may have different rules).
Make sure that they are the beneficiaries of your property.
* RRSPs – make sure again that you have the taxes covered for your investments. RRSPs work because they are a deferred tax – someone will have to pay for the taxes.
Make sure that the child/children are listed as the beneficiaries.
* Insurance – make sure again there are no tax costs – and make sure

I strongly suggest that you sit down with a lawyer and discuss what your needs are. A will doesn’t have to cost a lot of money – $300-$400. It is a worthwhile investment and will give you peace of mind.

Depending on what country you live in you will have to find out the laws around transferring property (primary and secondary), RRSPs (registered retirement savings plan) and so on.

Don’t wait do it now!

All my best,

Sandra

I wanted to share with you and article that I received from my financial advisor on Mutual Funds. I just talked to him this morning and we both agreed FOR ME, I will not be investing in any more mutual funds. Why? The return on a mutual fund is less than the fees that your advisor charges to maintain it from year to year. There is often a yearly cost to “running” the fund and there is often a hidden upfront or back-end cost that if you want to get out the fund before a certain time frame you will be charged XX dollars.

What can you do, as an educated investor – ASK QUESTIONS – Is there a yearly cost to maintain this fund? If I want to cash out the fund because I need the money will there be a cost? How long do I have to keep it before it is clear and free? Often it is 7 years, before you can get your money without a “penalty cost”.

Here is the article printed in the Toronto Star. Note that other countries have decided to BAN Mutual Funds.

This article appeared in today’s Toronto Star. It is another article confirming my despise for the mutual fund industry. Canada continues to drag its feet while countries like the UK, Australia, and the US are steadily banning the use of mutual fund trailer fees …. Enjoy the article.

http://www.thestar.com/article/846861–daw-industry-defends-mutual-fund-trailer-fees

Financial advisers are watching nervously and defending their value to Canadians as three other nations prepare to outlaw or curb what is, for most, their primary source of income.

Earlier this year the United Kingdom moved to outlaw by 2012 the sales commissions that are embedded in fees for investment products. Australian regulators proposed something similar. Then, late in July, the U.S. Securities and Exchange Commission (SEC) voted to cap such fees for mutual funds at a quarter the 1 per cent fee included in some funds in Canada.

No caps or bans are on the horizon in Canada. Yet associations for the investment industry and advisers were caught by surprise by the SEC’s vote. So the potential ramifications are already a hot topic for discussion.

A lot of money is at stake. Carlos Cardone, senior consultant with research house Investor Economics, says about $2 billion was deducted from Canadians’ mutual fund assets in 2009 to pay advisers what are called trailer fees.

That compares with about $9.5 billion in the U.S., with ten times the population. The Canadian figure excludes what banks embed in their funds to pay sales and advisory staff. Bank funds hold roughly 30 per cent of total mutual fund assets in Canada.

Cardone predicts a decline in trailer fee revenue, with or without changes in the law on such fees.

“Trailers are likely to be the next frontier for the decline in (fees for expenses) for mutual funds,” he said Wednesday. He foresees banks’ with lower fees will sell more mutual funds, driving others to lower total fees. At the same time, there is a relatively small but rapidly growing trend toward paying separately for advice and buying low-fee funds online.

The cost of advice and management for mutual funds is at the heart of the debate over whether the federal or provincial governments in Canada should offer cheaper alternatives for saving for retirement.

So the mutual fund industry and adviser associations are fighting back. The are emphasizing the value of advice in promoting savings and responsible money management, and using consumer surveys to prove their point.

Cary List, president the Financial Planners Standards Council that accredits and monitors Certified Financial Planners, says his groups’ research has found that 80 per cent of consumers who pay for financial advice make use of registered savings plans.

That compares with only 37 per cent of Canadians who try to get by without professional advice.

A separate report released Wednesday by the Investment Funds Institute of Canada reports data that individuals who choose financial advice accumulate more assets and are better prepared, financially, for retirement.

“Advised households, where the head of the household was between 45 and 54 years of age had nearly three times the level of investable assets of non-advised householders,” according to the report. “Having advice is strongly associated with the accumulation of financial wealth regardless of income level or age of household.”

It’s possible, however, that higher level of savings came first and the desire for advice second.

But List suggests that including the cost of advice mutual fund fees helps to ensure more Canadians will get advice. ( He would prefer they get it from CFPs, who have a code of ethics that requires them disclose the fees and put the interests of clients ahead of their own.)

“There is more need for professional advice than ever before,” he argues, pointing to the worrisome decline in the rate of savings in Canada to a lower level than in the United States.

“Currently, we don’t see an environment where people are willing to pull out their cheque book to pay for advice,” he said. Only about a tenth or 1,500 earn a living without being licensed to sell financial products and earn embedded sales commissions.

jdaw@thestar.ca

I am thrilled that this is so. I was asked to speak at one of my chapters on the topic of Financial Empowerment.

I sent two topic ideas:

1. The Role Of Women Today – it has been documented that women are no happier today than their predecessors – even going back to the Women’s Movement in the 1970s. Women are reaching greater positions within the corporate world, within countries – even leading countries – yet to do so there has been a mind set that women need to behave like men, be aggressive, manipulative and step on people – we have a glass ceiling. This is not true. Women can still achieve what they want and do it in a way that allows them to draw on their masculine energy (create my value/speak my truth) and feminine energy – nurturing, kind and compassionate.

2. Financial Empowerment- for too long women have handed off to their spouse, accountant, financial advisor their finances to the point that if something happened to their spouse or significant other they have no idea of their financial situation. Learn that taking back your responsibility and accountability can be fun — it’s a lot like organizing your closet!

While I like the first topic I am determined to bring financial awareness to women – mostly reducing the fear around this area and having them understand that they already perform so many of the actions on a daily basis – budgeting, organizing, tacking stock, and just plain doing!

I will let you know how it goes. I plan to bring this workshop to all women.

Let’s make 2010/2011 the year to take back your power – it puts you in a position to make good decisions and in the least be knowledgeable of your financial position.

All my best,

Sandra

In part of the process of understanding your finances it is imperative that you understand the terminology. Fancy names can be broken down to the most simple so that everyone understands. Being aware allows you to make better financial decisions that serve your needs. This way you are in full control of your future! Thank you Jay & Joan!

Tax Terminology and Acronyms
Terminology (general definitions):

Adjusted Cost Base (ACB)
In simplistic terms, adjusted cost base refers to the capital cost of depreciable property and, for property other than depreciable property, the cost to the taxpayer of the property with specified adjustments.

Allowable Business Investment Loss (ABIL)
Allowable business investment loss is a special rule to allow 50% of capital losses on shares or debt in a small business corporation to be offset against income when calculating taxable income.

Alternative Minimum Tax
A structure that provides for the recalculation of an alternative amount of tax based on the removal of certain tax preferences when compared with the regular tax calculation.

Canadian-Controlled Private Corporation (CCPC)
Canadian-controlled private corporation is a private corporation that is not controlled directly or indirectly by a public corporation, by non-residents of Canada, or by some combination of both.

Capital Dividend Account
A notional account available to private corporations to integrate corporate and personal income tax on the receipt of items such as the tax-free portion of capital gains and the proceeds of life insurance policies.

Cumulative Net Investment Loss (CNIL)
Cumulative net investment loss is the excess of investment expenses over investment income cumulatively since 1987 that reduces the amount of the lifetime $500,000 capital gain exemption.

Depreciable Property
Property owned by the taxpayer that is entitled to apply capital cost allowance.

Exempt
The item is not subject to income tax. An example of income that is exempt from income tax is a life insurance benefit payment or money that is inherited. In these examples, the initial funds are tax-exempt, but investment earnings on the funds are not.

Fully Taxable
The item is subject to regular full income tax. An example of this is employment earnings or interest income.
General Anti-Avoidance Rules (GAAR)
General anti-avoidance rules give the CRA broad powers to challenge technically correct transactions that violate the spirit and intention of a section of the Act or are abusive of the Act read as a whole.

Income Tax Instalment Payments
Under specific circumstances, a taxpayer may be obliged to make successive payments directly to the government for an income tax liability that is created during an ongoing taxation year.

Inter Vivos Trust
A trust that is settled by a living person.

Kiddie Tax
An income-splitting tax imposed to discourage income splitting with children.

Listed Personal Property
A sub-set of personal-use property.

Mutual Funds
A mutual fund is a pool of investment capital that has been used to purchase a basket of investment vehicles, most often equities or debt instruments. Investors may purchase an unlimited number of units (in mutual funds structured as trusts) or share (in mutual funds structured as corporations) in these investment pools, hence, the term mutual fund. The more units/shares of a mutual fund that are purchased, the lower the value of each unit/share. In general, mutual funds allow investors to purchase ownership in a diversified portfolio of investments for relatively small amounts of cash.

Personal-Use Property
Property that is used primarily for personal-use or enjoyment by the taxpayer or by a person related to the taxpayer.

Prescribed
Set or established by regulation as in prescribed interest rate.
Prescribed Interest Rate
The Act prescribes several interest rates to be applied in different situations. Items such as late taxes, tax refunds or taxable benefits attract interest and the prescribed rates dictate the amount.

Qualified Small Business Corporation (QSBC)
Qualified small business corporation are shares eligible for the $500,000 lifetime capital gains exemption.

Recapture of Depreciation
The recapture of capital cost allowance previously claimed as a deduction from income and brought back into income because of disposition.

Segregated Funds
An individual variable insurance contract, better known as a segregated fund, is an investment contract, considered insurance by law, where a specified group of assets outside the company’s general reserves supports the contract’s policy reserves. Segregated fund policies have values that vary according to the market value of their specific group of assets. Assets of segregated funds are not part of the general reserves of the insurer, so no laws prevent them from investing all their assets in equities. Depending on its contract, a segregated fund may allocate the assets to a fund of treasury bills, common shares, bonds and debentures, real estate or mortgages, like a mutual fund.
Sheltered
The item is subject to tax, but at a point in the future. An example of this is the earnings that grow within an RRSP or RRIF.

Small Business Corporation (SBC)
A CCPC of which all or substantially all of the assets, on fair market value basis, are used principally in an active business, carried on primarily in Canada.

Testamentary Debts
Refers to amounts payable as a consequence of death and includes income or profits, taxes of the deceased for the year of death or previous years, and any death taxes payable as a consequence of death.

Acronyms
ABIL Allowable Business Investment Loss
ACB Adjusted Cost Base
Act Canadian Income Tax Act
AMT Alternative Minimum Tax
CCA Capital Cost Allowance
CCPC Canadian-Controlled Private Corporation
CRA Canada Revenue Agency
CDA Capital Dividend Account
CEC Cumulative Eligible Capital
CNIL Cumulative Net Investment Loss
fair market value Fair Market Value
GAAR General Anti-Avoidance Rules
ITA Income Tax Act
ITR Income Tax Regulation
LSVCC Labour-Sponsored Venture Capital Corporation
MTR Marginal Tax Rate
QSBC Qualified Small Business Corporation
RDTOH Refundable Dividend Tax on Hand
V-Day Valuation Day
SBC Small Business Corporation
TONI Tax on Income
UCC Undepreciated Capital Cost

Jay F. Llave & Joan Morrow

Creative Planning Financial Group

(416) 487-5210

This is a good topic for me today for I want to write about our relationship or LACK OF relationship in Canada, actually North America, with our elderly.

There is much wisdom that can be imparted to us from our grand parents and great grand parents that when applied, maybe tweaked slightly, can really make a difference in our life.

The topic today focuses on teaching our young about money. Right now, as it stands, I invest my children’s money and they cannot touch it. I leave some in their account so if they really want something they can buy it. I know, that in some ways I am still enabling them. It is funny because my son wrote home from camp that his first day was challenging because he had to unpack his clothes and put them away HIMSELF. He is 10 1/2 years old. When I received the letter I thought to myself — this is good — he needs to learn to be responsible and accountable.

Consumer debt is a problem that is plaguing ALL countries around the world. Canada is one that is doing financially better than most. Do not kid yourself, we can easily become the US, Europe or Japan if we do not watch how we spend. People have been spending beyond their means for too long. Interestingly, my parents, or I should say my father, only spends what he can afford. He may create some debt however it will be manageable and likely for business. I learned this from him. I also learned in my failed marriage how to spend beyond my means. It is not a good felling and one that I WILL NOT repeat.

How do we teach something that we, ourselves, are not good with. I have some tips that Joan and Jay have provided. I do feel that we must learn to lead by example. Take this as a starting point. I have made it one of my missions to teach women financial literacy. I stay commited to this.

In the meantime… Here are 3 tips:

Three Ways To Teach Kids About Money

We hear a lot about financial literacy these days as Ottawa promotes its efforts to educate Canadians about money management, saving and investing. Clearly, the first steps begin with our kids, and not just in the classroom.

Parents, grandparents, and other caregivers can provide some of the building blocks to economic maturity by sharing their own experiences with money. Here are 3 ways you can help them understand basic financial concepts.

1. Let them manage their own income. It’s important for your kids to have their own money to manage – and mismanage. They will learn a lesson (albeit painful sometimes) when they spend their entire allowance on an impulse purchase.
2. Help them set goals and allocate their money. Set goals for donating, savings and spending and give them separate piggybanks to allocate the chosen portion of the money they earn.
3. Show them the power of compound growth. Opena savings account, GIC or other investment for your child. If you have online access to the account, even better – yur child can track its accumulation and online calculators to project future growth. It can be fun too!

Joan can be reached at 416-545-5352 or email her at joanm@cpfg.com

Jay can be reached at 416-545-5317

It is time as individuals we take responsibility and accoutability for our actions, choices and outcomes. If we want to change something, a behaviour, than we must change the way we think. It is ok to have “stuff” however at what expense. It is time to begin to live within our means.

All my best,

Sandra

This is the title of an article I recently came across. The article is an interview with Maddy Dychtwald, who co-wrote the book, Influence: How Women’s Soaring Economic Power Will Transform Our World For the Better with co-author, Christine Larson.

Maddy says, “the status of women is changing”. With women representing in some countries over 50% of the population, holding more prestigious positions and earning higher salaries than ever before, their earning power is increasing — allowing them to influence change. For the past two decades, the increase in female employment in the “rich” world has been the main driving force of growth, the Economist magazine said in 2006. “Those women have contributed more to global growth than have either new technology or the new giants, China or India”. That is incredible!

Maddy Dychtwald and her husband, Ken Dychtwald, co-founded the demographics research firm AGE WAVE. They conducted a survey along with Allianz, a financial services company, and Harris Interactive, a public opinion research firm, with 3,000 men and women with one question in mind – how do women handle their money as opposed to men?

3 trends emerged:

1. Money means security to women, freedom to men. Overall, women were far less optimistic and confident than men were about money. One in five women had a secret stash of money her partner didn’t know about – twice the number of men with a secret stash- to use as a hedge against financial disaster.
2. Men see themselves as warriors and women see themselves as worriers. Men are almost twice as likely to say they would take significant financial risks, while women are more likely to buy and hold investments, rather than churn them. As a result, women’s investments often do better than men’s in the long run (interesting – we let them grow!).
3. WOMEN ARE MORE LIKELY TO PUT OTHERS’ FINANCIAL NEEDS AHEAD OF THEIR OWN. The often feel torn between the desire to do what’s best for their family and what’s best for their own future.

While women may be hurting themselves, there is a social benefit when women chose to use their earnings to pay for university, support their children or help care for their aging parents.

Maddy says that despite women’s growing economic power, MANY WOMEN ARE UNSURE OF THEIR MONEY MANAGEMENT SKILLS. THIS LACK OF CONFIDENCE IS A ROADBLOCK TO ATTAINING THEIR DREAMS.

My feeling, and of course it is just that, is that women need to become accountable and responsible for their financial choices and outcome. It means simply reducing fear around an area that most women have handed off to their spouse, significant other or advisor. It is time that women take back their power. It means educating ourselves in this area. What I love about this area of my site is that it allows women to ask the most minute, simple question without fear of being ridiculed or laughed at.

I am well aware of my finances for I am divorced and have no choice. As I educated myself and asked MANY DUMB questions I now feel strong and confident when I sit with my bank person and am renegotiating my mortgage. I will no longer hand away my power. If I do not like something I will question it. It is my money and my choices. Saying that I often use my gut and intuition when making choices – like choosing my financial advisor. I needed to know that we were on the same page, that I can call him with a question and he will get back to me, and he does. I have referred him on to many other people. I also like that I have made money with him!

WOMENS’ ECONOMIC POWER AND INFLUENCE will change the way that marketers talk to us. Maddy says that women are the primary buyers of just about everything. We are responsible for 80% of consumer purchases! We can drive a new industry to grow or fail. Look at the organic and natural foods industry. It has grown 28% in two years, largely driven by women.

On my vision board I have the following words: I choose to embrace my power: confident, bold, beautiful after 40!

Women of the world, let’s embrace this power and use it in a way that is loving, kind and compassionate while still impressing what we want. That is what I call EMPOWERMENT and balancing our male and female energies- being empowered in a way that we are strong and embrace and live by our truth however in a loving, kind and compassionate way.

I left a message for Joan and Jay asking them for some clarity on some of the terms that they provided in their last posting. What I do know is that while some understand these terms, many do not. That is the exact point of this blog on financial empowerment. The more questions you ask, the better clarity you have the better you can make a decision.

I just was sent this article from the Business Section of the Toronto Star and the title is, Women’s power equals economic power. Women represent 50% of the marketplace and with some education we will have economic power to bring about changes we want. Get educated and ask many questions!

If I was shopping for a suit and I wanted a specific fabric, designer, and cut I will ask the sales person to help me. I laugh because every time I go into Home Depot to ask for something that I need to buy I never have the right terminology instead I use my hands a lot to explain. Well, that is not always the most effective way! I finally end up with what I need however it takes a few tries.

Here is the breakdown for you from Joan and Jay and if you have any more questions please do not hesitate to call:

Happy Spring!

This entry will focus on some key definitions many of our clients have been asking.
Money Market Fund = The investment objective of the Fund is to provide investors with interest income by investing in high interest cash accounts.

Returns (or Rate of Return) = The percentage by which an investment appreciates or depreciates over a given period of time.

Government bonds = “Government of Canada Real Return Bonds (the “Bonds”) constitute direct, unsecured, unconditional obligations of Her Majesty in right of Canada. The Bonds may be issued from time to time in different series, with the coupon rate and maturity date (“Maturity”) varying for each series. The Bonds of a series may not be called for redemption by the Government of Canada prior to Maturity for that series.
Each Bond has a nominal principal amount of $1,000 (“Principal”).
The Bonds bear interest adjusted in relation to the Consumer Price Index for Canada (the “CPI”).
Interest on the Bonds consists of both an inflation compensation component (“Inflation Compensation”) calculated based on Principal and payable at Maturity and a cash entitlement (“Coupon Interest”) calculated based on Principal and accrued Inflation Compensation, which Coupon Interest is payable in semi-annual instalments on the dates specified for each series of Bonds (the “Coupon Payment Dates”) in each year. Coupon Interest is calculated by multiplying one-half of the specified annual coupon rate for the relevant series of Bonds by the sum of the Principal and the Inflation Compensation accrued from the date the first Bond of such series was issued (the “Original Issue Date”) to the relevant Coupon Payment Date. At Maturity, in addition to Coupon Interest payable on such date, a final payment (the “Final Payment”) equal to the sum of Inflation Compensation accrued from the Original Issue Date to Maturity (whether positive or negative) and Principal will be made.”

Guaranteed Deposits = “The Canada Deposit Insurance Corporation (CDIC) is a federal Crown corporation created by Parliament in 1967 to protect your deposits made with member financial institutions in case of their failure. CDIC guarantees deposits with registered institutions in the event of the institution’s insolvency. This deposit insurance offers a maximum guarantee of $100,000 per person, per registered institution.”

Liquidity = The degree to which an asset or security can be bought or sold in the market without affecting the asset’s price. Liquidity is characterized by a high level of trading activity. Assets that can by easily bought or sold, are known as liquid assets.
It is the ability to convert an asset to cash quickly.

Bond yields = Yield is defined as the annual cash distributions divided by the current share price, in this case from bonds.
To calculate current yield for bonds, divide the coupon rate by the number shown as current price and multiply by 100. Example: 8.60% coupon divided by 85 current price = 0.1010, multiplied by 100 = 10.10% current yield on the bond.

Debt instrument = A paper or electronic obligation that enables the issuing party to raise funds by promising to repay a lender in accordance with terms of a contract. Types of debt instruments include notes, bonds, certificates, mortgages, leases or other agreements between a lender and a borrower.
Debt instruments are a way for markets and participants to easily transfer the ownership of debt obligations from one party to another. Debt obligation transferability increases liquidity and gives creditors a means of trading debt obligations on the market. Without debt instruments acting as a means to facilitate trading, debt is an obligation from one party to another. When a debt instrument is used as a medium to facilitate debt trading, debt obligations can be moved from one party to another quickly and efficiently.
If you would like us to publish more definitions, please write our editor for the specific terms you would like us to discuss.

Happy investing,
Jay F. Llave and Joan Morrow
416-545-5352

For those not familiar with some of the “financial terms” I have asked Joanne to give you a glossary of meanings. I read below and I understand what she is talking about however I am “empowered” and in charge of my finances — it’s just me I have to be.

As you know this site is about breaking things down to the “simple” and that just means that I give you the meaning of the terms so that you can understand what a financial person is saying only in layman’s terms. (I like that it is lay”man” and not woman). Money is something that many of us hold dear to our hearts and so if you are going to ‘part with it’ even from an investment side I want to make sure that you FULLY understand what is being told to you.

The option that Joanne has given you in ‘the closet’ idea is this (the best I can do). When I invest in my closet and clothes for the season I take into consideration how I dress — for me it is more casual however I am entering the corporate world so I need to shift my purchases a little to make them more versatile. My long term purchases are going to be the more classic and for some more conservative purchases: the black dress, a scarf, certain shoes and so on. This is clothes that will be in my closet for months and probably years. For the more trendy stuff — I just saw Sex And The City2 movie and some of those clothes were pretty out there. Some I loved — especially the shoes. When I come to a season and I look at my “cash” that is sitting in my bank (ok it’s from my credit card however I do pay it off with cash) I consider how much am I willing to pay, how many times will I wear it (that’s my return on investment) and will it be in style next season. With this in mind I shop. The more the trendy piece it is the less I want to pay for I know that I will only be wearing it for a few months, especially in the summer for our summer is short. For the winter months there is a greater return on investment because the season is longer. Thinking short-term – 1 month up to a year I keep a price in mind and then I buy the trendier clothes and feel good about wearing them. I match it up with great shoes, a purse, a scarf and the outfit increases in value tenfold!

With your money that you have in the bank, know that money sitting there brings no return or very little. In order to increase the likelihood of receiving a greater interest (these are rates set daily or for a short period of time – 1 year, 2 year) you will want to look at things that you can put your money into that is not risky (or only slightly) and come out with even more money. Keep in mind all money earned through interest is taxable so you may want to talk to your financial planner as well as your accountant.

GLOSSARY(to come shortly):

Here is Joanne’s blog:

There are a couple of alternatives to consider that may provide better returns while still providing reasonable security and access to cash when you need it, short-term bonds and money market funds that invest in short –term debt instruments. By assuming slightly higher risk, government bonds with maturities of 1 year or less potentially offer better returns over cash or guaranteed deposits. Their short maturities provide liquidity if you need access to cash. They are backed up by the federal or provincial government and can be considered very secure (although not guaranteed). Bond yields can fluctuate according to interest rates so they do have a small amount of risk. Money market funds that include bonds and other short-term debt instruments may produce higher yields with only marginally more risk than your cash savings account.

For more information please contact joanm@cpfg.com

Jay and Joan have provided their tips and tools on Managing Your Credit Report. It is about keeping a good credit score.

There is a volume of information. I encourage you to go through this many times. Write down your questions and call Jay and/or Joan if you need clarity.

I have referred many times to the “closet theme”. In this case it is about “refreshing your closet every year” – know where you are at. When you shop – you can use a credit card – then pay it off at the end of the month. Stuffing your closet with things you do not need and will never wear (remember Carrie in Sex in The City – movie 1) for this is not a good use of your credit card and likely will lead to a bad score – for how will you pay off all that debt. Make it manageable.

Enjoy the wisdom shared below:

“How to manage your credit report”
Or
“Why does having a high credit score presume I am honest and I will pay back a loan? How do I manage my score?”

Spring is here and Toronto is busting with festivals; Blues Festival, Jazz Festival, Rock Festival, Family Festivals, and Children Festivals
My summer of festivals becomes a lot less festive when purchasing a condo – my very first 836 sq. ft. space in Toronto that I can call my own.
Fellow readers and friends, I don’t have enough cash in the bank to pay for the condo so I had to borrow it.
Lenders determined my credit worthiness:
• not because of my integrity.
• not because I am a Toastmaster.
• not because I am a nice guy.
• not because of my professionalism.
• not only because of my income.
They based it on a score, not a test score, my credit score.
My parents always told me to be honest and manage your credit report.
To me, honesty is important but it has very little to do with having a high credit score, it is being more practical than honest.
Having a good credit report means that you know how to manage your credit report.
Having good credit makes life easier.
Things go more smoothly.

Friends I am writing today to give you the unwritten rules of managing your credit report.
In North America, it is our baseball card. It’s our business scorecard.
#1 Get credit by obtaining:
1. 2 credit cards (Visa, MC, or American Express)
2. 1 store card (Best Buy, Canadian Tire, any retail store card)
3. Instalment account (home renovation or personal loan)
4. Car loan/lease
5. LOC/HELOC (Lines of credit or Home Equity Lines of Credit)
• Notice I didn’t mention mortgages, because mortgages are not on your credit report (Canada only)
#2 Use all credit cards at least once every 2 months.
1. even in small amounts, and
2. pay it off at end of month
#3 By using one credit card and pushing it to the limit actually has a detrimental effect on your credit score.
#4 If you have to keep a balance for a month, stay below 49% of the limit.
#5 Do not cancel credit cards.
#6 If you have to cancel start with the latest and work your way down.
#7 Do not pay your credit card balance more than 28 days late.
#8 Have Identification verified before checking credit – set it up with equifax.ca and transunion.ca.
#9 A good rule of thumb when shopping for a mortgage/automobile is to have three banks only check your credit on the same day.
#10 If you need to pay your balance late, borrow the payment.
#11 Check your credit report every year.
#12 Check property title every 4 years to ensure information is correct and updated.
#13 Apply for credit when you don’t need it.
#14 Keep documents even after you have paid off any loan
#15 Always use the same full name .
#16 Become knowledgeable of identity theft prevention.
#17 Don’t negotiate a settlement on a debt for less than what you owe.
#18 Set aside a minimum of 6 months income or expenses in an emergency fund
#19 Think of your credit with every business transaction.
#20 Protect your credit.
The above rules of managing your credit report come as a result of interviewing thousands of credit holders and many years of experience managing them.
Having a good credit score will allow you to access money at a very low cost. In turn, when an opportunity arises, you are well positioned to take advantage.

Sincerely,
Jay F. Llave and Joan Morrow
Jay – 416-545-5317
Joan – 416-545-5352

I have teamed up with Joan Morrow, an Insurance Advisor and Jay Llave, an Insurance and Financial Advisor both part of the group called, Creative Planning, Financial Group in Toronto, Canada. I attended one of their talks aimed at reaching women. Following their discussion we launched into a whole discussion about women and finances. We all agreed that many women out there fear finances to the point of doing nothing. The women who attended this speaking event were what I call, educated and moderately sophisticated investors, Tier II vs. the woman who is unaware and does not know where to star, Tier I.

Thank goodness there are advisors out there who really do want enlighten and bring awareness so that women can begin to take back their own power. Statistics say that women represent close to 50% of the market and that there are millions if not trillions of dollars sitting in bank accounts or investments that are not earning their potential. With some knowledge, awareness and good questions you can begin to have your money work for you. The first thing is to reduce the fear around money and to have the women realize that they perform so many of the desired skills to do with money – budgetting, investing, tracking, and so forth – on a daily basis.

I have used this analogy many times – your clothes closest is like your financial closet – know what’s in there, what is serving you and working for you and what is not. It may be time to discard the “dead weight”.

Question: Can saving get any easier? Yes*
*only if you are reading this after Jan. 2, 2009

Sandra asked me “How does someone start saving and in what type of savings vehicle?

To answer your question Sandra, let’s start at the very beginning.

Financial Planning 101
Section 1: Part 1: Sub-Section 1
There are two types of people in this world, those that save and those that borrow.
Every day someone is earning money and it is always the saver. Every day someone is losing money and it is always the borrower. This cycle continues every day, 365 days a year, for an entire lifetime.

Which side are you on today?

On which side do you think wealth begins? Saving or borrowing?

Saving money just got easier therefore wealth just got easier.

Solution: A Tax-Free Savings Account (TFSA) account is a great option for tax-sheltering your savings. A TFSA gives Canadian residents aged 18 years and older another place to save and keep all the growth for themselves. You can withdraw funds at any time and for any purpose. For those in the US or outside of North America you can see if your bank offers similar products to this one – with similar or same advantages.

It has never been so easy and the timing is perfect.

Read below for notes on TFSAs.

If we can answer any of your questions, please email us at joanm@cpfg.com or jayl@cpfg.com.

Sincerely,

Jay Llave and Joan Morrow
Creative Planning Financial Group
———–

To know more about TFSA’s please see below:

• Investments can be in any RRSP-qualified savings account
– E.g. savings accounts, GICs, mutual funds, segregated funds, stocks and bonds
• TFSA assets can be transferred to a spouse or common-law partner on death
• Can be assigned as collateral for a loan
• Income and withdrawals do not affect eligibility for federal income-tested benefits and credits
– E.g. OAS, GIS, Child Tax Benefit, EI benefits, GST Credits, etc.
• Plans offered through insurance companies are creditor protected
• Beneficiary designations are allowed on plans offered through insurance companies
• Amounts withdrawn can be re-deposited after a one year waiting period without reducing contribution room
• Spousal contributions are not allowed
• TFSAs must be held individually, not jointly
• Investment income will not be taxed and contributions are not deductible
• You can hold as many TFSAs as you like within the contribution limit

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